Silver is the common man’s currency. It always has been, and it
always will be. While gold holds its place in history as the great
stabilizer of economies and the shield against hyperinflation, its shine
and its safety should not distract us from its brother, silver, whose
uses are numerous and whose value is often more attainable for those
seeking a solid investment outside of precarious paper securities.

Gold’s unprecedented upsurge in price the past year alone is now
becoming the stuff of legend, and it is also something we at Neithercorp
have been predicting for a while now:

The mainstream media attacks on precious metals were so extreme last
year that they began to border on the bizarre. The “cult of fiat” was
relentless in their attempts to slander gold investors and it seemed as
though no matter how well the yellow stuff did, or how dismal the
dollar’s performance was, they would never get tired of the
disinformation game. Fast forward a year later, however, and they have
been utterly silenced. What a difference twelve short months can make…

As I write this, gold is holding after a spectacular drive at around
$1390, which is in line with my prediction of $1350 to $1450 by winter
2010, and on track to meet my prediction of $1500 by the beginning of
next year. We’ll have to wait and see, but what seemed absolutely out
of reach during this summer is now looking rather simple to achieve
today. Of course, silver has been a bit harder to put a finger on, and
there are many unfortunate reasons for this.

The silver market was wholly dominated for at least two decades by
only a few corporate banks, but primarily through the infamous JP Morgan
and the HSBC. Using coordinated naked short selling and massive
amounts of capital, they have been able to knock silver down every time
its value fell below a certain ratio to gold; usually 60:1. Only
recently has that ratio moved slightly closer to the true wealth of
silver. The historical average ranges between 16-33 ounces of silver
for every ounce of gold.

These banks have also been issuing paper silver securities, usually
in the form of ETF’s, which have no REAL silver backing them. These
securities give investors the illusion that there is too much silver on
the market, and not enough buyers. This causes devaluation in the
metal.

Gold has suffered from the same manipulation in the past, but the
silver market is even more tightly controlled, at least, until this
year…

In November of 2009, a metals trader in London by the name of Andrew
Maguire contacted the CFTC with inside information that JP Morgan Chase
Bank was deliberately interfering with the silver market on an enormous
scale. He not only told the CFTC how the bankers were doing it, he
PREDICTED when they would do it again! Maguire gave two days advanced
warning that JP Morgan would attack silver on Feb 5, 2010. The market
played out exactly as he said it would:

The bankers were now caught red handed. The market could only go up from there….

Indeed, silver is now holding at around $27 an ounce, up from less
than $10 an ounce two years ago, closing in on a 300% gain. If you
bought silver in 2008 as I did, then you’ve made out incredibly well in a
very minimal time span. But what about people who were afraid to dive
into the market back then, or who just weren’t aware of silver as an
investment at all? Have they missed out? Is the $30 mark as good as it
gets? I believe that silver still has a long way to go before it
peaks, and room yet for millions of new buyers who are in need of a safe
haven against the imploding dollar but don’t have the finances to
purchase gold. Here’s why…

Bank Fraud Exposure Hitting Mainstream

The Andrew Maguire incident was just the beginning and the event
acted as a springboard. Both JP Morgan and HSBC are now under
investigation for silver manipulation pending a lawsuit filed in New
York. The suit accuses the banks of using their 85% commercial net
short position in the silver market to control its value on the COMEX:

CFTC Commissioner Bart Chilton has announced his belief that there
is, in fact, manipulation of the silver market. In his statement he
said:

“I believe that there have been repeated attempts to influence prices
in the silver markets. There have been fraudulent efforts to persuade
and deviously control that price. Based on what I have been told by
members of the public, and reviewed in publicly available documents, I
believe violations to the Commodity Exchange Act (CEA) have taken place
in silver markets and that any such violation of the law in this regard
should be prosecuted.”

The bottom line is that the corruption in silver trade has been
brought into the light of day, which means banks will have to, at the
very least, back away from their activities to a point, which will allow
PM’s to grow according to free market fundamentals, instead of global
banking whims. This explains why silver has jumped to $27 an ounce so
quickly, but it also signals the possibility of even greater gains in
the near future, especially in light of QE2 and the weakening dollar.

Silver Supply Declining

Just as with gold, silver availability, from mining to inventories,
is in decline. This would not be so much of a catalyst if demand
remained at levels similar to a decade ago. That is not the case.
Demand is skyrocketing.

In June, the U.S. Mint announced it had run out of silver bullion blanks for the production of coins like the American Eagle:

On top of all this, silver is used in the making of many industrial
and consumer products, including electronics, photography, batteries,
and engine components. This puts an extra strain on silver supplies
that is not felt as prominently with gold. Meaning, the ability of
silver to outperform gold in terms of demand and investment potential is
very high.

Dollar On Its Last Leg

The private Federal Reserve has been injecting fiat into our
financial system for quite some time. The acceleration in 2008 heralded
a new stage, however, in the devaluation of the dollar. Contrary to
popular belief, the bailouts and quantitative easing implemented that
year never actually ended. The bailouts of Fannie Mae and Freddie Mac,
for instance, have continued non-stop every quarter since the mortgage
crisis unfolded. Without a full audit of the Fed’s accounts, there is
no way of telling how much money has been created out of thin air. We
do know that it is enough to drive foreign investors and central banks
out of the dollar and into gold and silver en masse:

The announcement of QE2 has compounded the precious metals issue (not
because the Fed is creating more fiat, they were already doing that
unhindered). No, it is because the Fed signaled to the world OPENLY
that they were about to deliberately devalue the Greenback, instead of
just doing it under the radar. They erased any delusions left in the
investment world had that they would try to protect the stability of our
currency. As a result, the dollar index has dropped like a rock into
the recesses of some distant Grand Canyon, while PM’s have spiked.

As gold climbs into the $1500 range, the effect on silver will be
evident. Gold will be less and less attainable by average people with
lower incomes, but these same people will still be exposed to dollar
devaluation, and the need for a hedge against inflation; enter silver.

I believe silver will become the single most important investment of
our age, filling the void in the wage gap gold leaves behind. As gold
shoots into the stratosphere, it will be silver that people turn to most
for smaller investment needs, which means much higher demand and much
greater returns for those who are smart enough to buy now. $27 an ounce
is incredibly affordable, especially when considering that the metal
has the potential to reach $75-$100 an ounce in the next two years (and
that is a conservative estimate).

There is little doubt that the dollar plunge will continue to drive
people towards PM’s. While Ben Bernanke and Timothy Geithner have both
made claims pre-G20 that QE2 is not a move to devalue, the rest of the
world is unconvinced. Reuters recently called the meeting in Seoul,
Korea “G19 plus 1”, as foreign nations become infuriated with the
Federal Reserve’s actions:

Now, why is Greenspan of all people suddenly coming out against
blasting the financial system with fiat? It’s hard to say. We have
written here often at Neithercorp about the deliberate destabilization
of the American economy in order to remove the dollar as the world
reserve currency and replace it with the IMF’s Special Drawing Rights
(the SDR). We have also written about the possibility that the IMF
will attempt to insinuate itself into the U.S. system as a “savior”,
implementing supranational control over our fiscal infrastructure, just
as it is trying to do in Ireland today:

It is perhaps possible that the Fed itself (the institution, not the
people who run it) may one day be offered up to Americans as a
sacrificial proxy to be torn down as the lone culprit of global
collapse, only to then be replaced with the IMF (which is worse, because
they don’t even live in this country). In any case, the dollar is
going for a ride into the backwaters of historical infamy, and it will
take us all with it if we do not protect ourselves from its demise.
Gold, and most especially silver, give us the power to do this.

The Return Of Real Money

While many people in the Liberty Movement are preparing diligently
for the inevitable dollar plunge, some have still not delved into the
world of PM’s, either because they are afraid it will be too
complicated, or because they feel it is unnecessary. Obviously,
survival goods are absolutely imperative, along with a solid plan for
keeping one’s self and his family safe. However, the need for an
alternative economic outlet to take the place of the failing dollar
should not be overlooked, even by the average prepper. A system of
barter is a tremendous starting point for such an alternative, but
eventually, expanded trade also requires some form of currency.
Preferably, one based on a tangible commodity that can’t be recreated to
infinity. Precious metals have fulfilled this role for thousands of
years, outliving every fiat currency ever printed. Of these metals,
silver was always the one most commonly used.

Beans and bullets aside, Americans need a way to protect their
savings from what is coming, as well as a way to support a replacement
market outside of elitist control. There is a reason why central banks
across the globe are stocking up on PM’s; because they know full well
that the dollar’s days are numbered, and they plan to capitalize on its
death. If the banks are allowed to dominate the supply of PM’s, simply
because only a few people had the good sense to stock them while they
were readily available, then our options for a free economy grow that
much slimmer.

There will always be dips, corrections, and fluctuations in metals,
and this should not deter us psychologically from their ultimate
benefits. Every citizen of this country can and should purchase at least
some insurance against hyperinflation and monetary catastrophe, and the
most affordable insurance with the greatest potential today is physical
silver, bar none.

maybe according to the point and figure chart but the measured move from the breakout of the huge inverse head and shoulders would be more like 31. close but not there yet. and then it usualy just consolidates for a while. sometimes it retraces about 50% of the breakout move and sometimes it even retests the breakout point if fundamentals don't justify the breakout (but they do).

the main thing is once the initial retest is over, the slope of the move will continue for as long as the pattern took to develop. since the pattern took 2 years to develop, and if you could extend the chart 2 years, you could draw a two year projection line that would target the logrithmic scale of like $150 or more, which is pretty freaking amazing.

Gas was 0.31 in 1960, so that quarter buys more now than it did fifty years ago.

I've got a question for you, if you see this again. Is there any disadvantages to junk silver coins? I look at it as melt value is melt value, but .9999 fine stuff seems to command more respect in terms of premium. Any thoughts?

(plus I just like to think about all the places and people the coin's been through. Crazy stuff, like I wonder where this coin was when JFK was shot and such. I know, nuts.)

It commands a higher premium because it is more pure and hence easier/cheaper to refine. Also because the producer has to recover his production costs of creating the .999 bars/rounds while sellers of 90% silver did not pay the US Mint to make the coins for them. Finally, a 90% coin that has been circulated for 40 years is not going to be its full weight due to wear.

Is this for real? A years output traded in a day? Could you confirm what that volume was composed of - pure physical or paper only or a mix (if so what was the ratio of physical to paper)?? Are you aware of any equivalent activity on the LBMA??

If you're minded to respond I have another question: Why do you think that the paper market (which offers cash settlement terms) will crash if there is a commercial signal failure should the exchange be unable to meet physical delivery deadlines/volumes. Surely both the paper and the physical markets will rise - AND - how could you price these contracts differently, surely the derivative and physical markets influence one another in (supposed) price discovery??

Dollar got slammed today in a down stock market. So did Treasuries. Good luck with your deflation fantasy. I kinda remember explaining this would happen just yesterday. But you go ahead and declare victory against inflation as silver trades from 18 to 29 to 26. LOL. Yes. Huge victory for deflation has been won thanks to the use of capital controls by the commodity exchanges.

Maybe you should remind us all of your degrees and such that prove silver never went from 18 to 26 and gold never went from 1100 to 1350. I seem to remember those were the entirety of your deflation thesis.

Many investors expect gold to protect their portfolio from economic uncertainty, but gold's recent sharp rise is being fueled by speculation that could end badly for buyers, says Kurt Brouwer, editor of MarketWatch's FundMastery blog.Video: Gold's rise may end badly for investors.

No, I don't think so. Are you sure you're actually a trader? Have you ever actually paid attention to the markets? Obviously not, because these types of moves are totally normal. We're just not used to them recently what with all the thousands of factors converging to push silver irreversibly higher.

But seriously, learn about the PM market, or shut the fuck up. Right now, you're just an ignorant twat when you talk about gold or silver.

Unlike your highly insightful first comment or other multiple one or two word comments. Here's one word for you: hypocrisy. Anyone who would attempt to compare the situation in 1980, where the US was a creditor and not a debtor (good luck raising rates this time), where in communist countries like Russia and China a single ounce of silver couldn't be bought, where Indians had about 1/50th of the disposable income as now, where silver was moved by a single family and not hedge funds, billionaires, and millions of middle class around the world who can no longer afford to buy gold and want to dump dollars - does not deserve a reply, but I had nothing else better to do after counting all the silver I bought today.

I was shopping for Tupperware (I pack my work lunches ok) and saw a set that claimed to use silver in it's construction to keep the food fresher. Maybe gimmicky but looks like places are using it. Hell bought a pair of sports shorts that claim it in their construction.

You should also notice that demand has consistently exceeded supply. This is the reason for the increase in investment. People want to store silver for the supply squeeze that must come as we run down the world's inventory, a process that indeed has not been priced in due to market manipulation (hiding the brick wall you are barreling towards at full speed does not make it disappear, it just makes the eventual impact more painful).

The sudden discovery that the amount of silver available is actually 1/100th what it was claimed will blow up the price. The discovery that there is ZERO silver, save that which made it into investor hands, will be like a planetary impact.

Silver is the best electrical conductor (I own several devices that operate on this electricity stuff).

You probably don't know this, but silver helped make that leisure suit you're wearing (cause who can afford cotton anymore?):

Approximately 90 percent of the silver employed as an industrial catalyst (630 tons/year) is used for the production of ethylene oxide from ethylene. Ethylene oxide is the foundation for flexible plastics such as polyester textiles, used to make all types of clothing and a variety of specialty fabrics.

Those new-fangled solar panel thingies - silver.

Know that nasty MRSA thing that people keep getting while they're in the hospital? Guess what you can treat that with (hint: not Methicilian).

It's trading as money, Djirk. Ignore "fundamentals" while money printing is the order of the day.

Poor person's gold and so on . . .

What I'm watching is if a PM correction is underway or it's a 1-2 day wonder, how much (if at all) will Ag underperform Au on the way down. If Ag goes down rel to Au less than it went up, that would confirm for me that Ag is indeed the stronger asset. 16:1 again?

Silver solder replacing lead solder (EU mandate), Solar Panels, water purification, RFIDs, medical devices, antibacterial hospital products such as paint, linen, garments, etc., and there are many more. Products containing Silver have received more patents in the last ten years that all other metals combined, thanks to nano-technology.

It's called an inelastic commodity. The great increase in price only brought down the consumption by 3%. Given that we are running down the last of the above ground stockpile now, you haven't seen anything yet.

But by all means, sell/short silver all you like. I'll gladly take your purchasing power.

"I am not saying that silver is a bad investment, I do not believe it is driven by industrial fundamentals."

So, the only legitimate demand for silver is "industrial applications" and maybe jewelry? You reject investment demand as illegitimate?

Let me ask you a question: Other than investment demand, what source of demand is there for stocks? U.S. Treasurys? Other than investment demand, the only use for a stock certificate is to light a trash fire or a cheap cigar. Apart from investment demand, a U.S. Treasury bond is a very harsh form of toilet paper.

For the record, I am long (john) silver. I was just calling out that the price growth appears to be driven more by speculation/hedging, not growth in demand. Therefore requires a different more alert investment approach.

Non industrial demand ie more liquid demand can move price quicker both up and down.

Wow gold "plunges" to 1355. Uh a couple of months ago the idea that it could breach 1300 was considered impossible and it's been a bubble since it broke 950. It's kind of funny to watch the pundits smugly report how gold just isn't safe because it sells off so quickly. Yet those same wonks turned their knows up at gold when it was at 850. No bona fides to comment on gold IMHO.

..... how i love this website, what a wealth of knowledge. ....... even if you cannot afford much, just buy something, that is the lesson i've learned here on ZEROHEDGE. My lesson from all the wonderful writers was to just "accumulate, buy what you can, a little or a lot, just keep putting your savings every week into a silver eagle........... i followed your advice & am so happy ......... I now have accumulated for almost a year & have 300 pieces of silver bullion, eagle coins .......... DAMN BANKS ! THAT'S WHAT THEY GET FOR NOT PAYING ME INTEREST ON ACCOUNT !!! I HAD TO GO TO THE BANK TODAY TO PUT SOME CASH IN MY ACCOUNT FOR BILL-PAYING & AS I WALKED OUT I LEANED OVER TO THE (very young & naive) BANK MANAGER, "Let me know when you pay interest again here at the bank & I'll stop buying silver & actually add to my savings account !! " ............. he looked dumbfounded & didn't even understand what the hell I was talking about .

Well, demand can change with time. When people start to realise that the dollar is not the real money, you will see a huge increase of investment demand for silver, which will make the total demand to explode.

I'm hearin' ya' Clint - it's the insurance component, the longer term supply / demand characteristics and the scam side of silver that keeps me trading and investing Ag. If the demand exceeds supply we get a commercial signal failure and we'll make some big bucks thanks to those crooks at JPMC. If hyperinflation arrives then the insurance was needed and will work. However, looking passed all the doom and gloom - there is a long term component here - silver is finite - 8-10yrs is my investment time horizon - I just keep adding physical, it's that simple. I trade the paper and invest in the physical.

You can also go the the post office and send Apmex a money order. To save the 3% credit card fee. If you keep it under 3K the P.O. does not have to report it to Homeland and the IRS. If you buy a once of gold, and something else, Silver, Platinum, or Palladium every week it cost averages and keeps it all pretty clean. Works for me. Simple and Easy.

buy gold and silver and pray it never goes up. if you want to play the price swings then do it with the gld and slv, but for christ's sake don't buy the physical hoping to make a fortune on it. it's insurance. who buys insurance hoping they get to use it someday? buy only what you think you will never ever need to sell. like a college fund, think of it as an inheritance fund for your heirs.

just ask youself if you feel like you have enough already and if not, then go buy a little more. when the price is high like it is now you'll probably feel like you've got too much already.

but whatever you buy, do it thinking you hope you'll never have to sell it. the only time you'd hope to use it is when this freaking fiat monster world we live in crashes and then it becomes money again. i mean who sells money now? nobody but the people buying gold and silver. so why would you sell gold. if you have to sell gold then you bought too much. just make sure you got some gold and silver and don't hope you get to 'sell' it for a profit later.

if they ever do a currency conversion later here's how it will go. they'll say okay we'll give you 1 sdr for every 10 dollars of your worthless currency. before the conversion gold might be $1500/oz but now it's 150sdr's/oz. then they revalue gold where it should be like 10,000 sdr's/oz and they just stole all your wealth and made everyone poor poor pitiful slaves. but if you already had gold and silver you'd still have the value and probably more because then it would be valued realistically and not fictionally like it is today.

the gld and slv won't work for this because they'll reveal the scam that it is ... just a diversion for the demand of physical until they have time for their plans to take place. even if those etf's have some physical, they just steal it and say oh guess what, you should have read the prospectus. or here's your 150sdr's/oz. and that's how the next confiscation will take place.

and if you can't afford to even buy silver and never sell it, then go tell all the people you know who can afford it to buy some. at least later on you'll know someone who made it through. it's like not buying lottery tickets but hoping somone you know wins the lottery.

my guess is that if they think the report is worth $7500 then it contains information for a tremendous wealth generating opportunity. when you view the table of contents in the sample summary, i doesn't take much to imagine what the report contains. especially the last section with all those countries future fabrication demand.

What is the ZH community best guess at the size of the current World Silver Reserve Base [Reserve Base.—That part of an identified resource that meets specified minimum physical and chemical criteria related to current mining and production practices, including those for grade, quality, thickness, and depth. The reserve base is the in-place demonstrated (measured plus indicated) resource from which reserves are estimated. It may encompass those parts of the resources that have a reasonable potential for becoming economically available within planning horizons beyond those that assume proven technology and current economics. The reserve base includes those resources that are currently economic (reserves), marginally economic (marginal reserves), and some of those that are currently subeconomic (subeconomic resources)].

There is a reason to count these separately - investment silver is not consumed and could be recycled in the future. It represents the physical transposition of reserve base into above ground silver. At some point all the silver will have been extracted and what's left at that point will be what's on the surface.

850MMOz rising to 965MMOz by 2014: which means taking my reserve base estimate that we have 20yrs to total reserve exhaustion if current and projected extraction rates continue and even allowing for a 10% reserve base expansion due to price improvement.

20 years to COMPLETE RESERVE BASE EXHAUSTION.

Does anyone have anything to add here - can you contribute to this data set? Thanks